You’ve decided to buy your first home! Congratulations, you’re in for an exciting ride filled with joy, anticipation and ultimately the satisfaction of turning the key to your own home.
But, where to start. For many first home buyers, buying your first home can be a challenging process. Your time is spent planning; what kind of home you can really afford, what deposit you’ll need, your plan of attack to reach that deposit goal, and that’s just the first stage of the process.
While most first home buyers might try to reach a 20% deposit goal, many might not have the ability to achieve this in the desired timeframe and end up paying Lenders Mortgage Insurance. Which is why so many first home buyers are taking advantage of the First Home Loan Deposit Scheme while it’s still around.
So, what is the First Home Loan Deposit Scheme?
The Australian Government launched the First Home Loan Deposit Scheme as a Government guarantee designed to help first home buyers on low and middle income earners to purchase their first home a little sooner.
Normally, anyone purchasing a property would need to save a 20% deposit (based on the property value) in order to avoid forking out extra to pay for Lenders Mortgage Insurance.
Taking advantage of the New Home Guarantee allows first home buyers to bypass Lenders Mortgage Insurance without having to stress about providing an extra 15% in your deposit.
What is the First Home Loan Deposit Scheme vs the New Home Guarantee?
The Scheme has been around for almost two years and in that time there has been two releases. In 2019 the initial launch took place for the 19-20 financial year that was named the First Home Loan Deposit Scheme, and then late last year the Government launched an additional 10,000 First Home Loan Deposit Scheme places for the 20-21 financial year, known as the New Home Guarantee.
It’s important to note here that the requirements for each of these releases are different. An explanation on each of their eligibility requirements can be found on the National Housing Finance Investment Corporation website.
As an approved lender for the New Home Guarantee we want to make sure that understanding the Scheme and how to apply for it is as easy as possible. So, instead of telling you ourselves, we thought we’d let one of our Members explain it from a first home buyer point of view. Here is Jordan and Carlie's story.
How did you find out about the First Home Loan Deposit Scheme?
We first found out about the scheme through the media, when the Government advertised that those purchasing their first home would be able to get into the market sooner than expected! To be honest it had slipped our mind until our mortgage broker suggested that we would be able to access it through Queensland Country Bank – we were then over the moon as it meant we could go ahead with the purchase.
What was your living arrangement prior to buying your first home?
For three years we were renting a three-bedroom house in Garbutt, Townsville, QLD. First of all with housemates, though when they moved out it was just the two of us for eighteen months.
What has the First Home Loan Deposit Scheme meant to you?
It meant that we got the loan that we needed to fulfill our dreams. For the whole time we were searching for ‘the one’ we agreed that we wanted a Queenslander-style property, located in one of the suburbs of Townsville’s ‘CBD surrounds’, on a bigger block in which we could grow our future. By being able to access the First Home Loan Deposit Scheme we were able to achieve this much quicker than having to wait the time required to build the 20% deposit to avoid Lenders Mortgage Insurance. This also meant that we had the money within our budget to afford fencing (to keep in our latest addition to the family - Mini Dachshund puppy called Bonnie), removing messy mango tree and bamboo clumps, turfing, and fixing up anything that has popped up along the way.
What type of property did you purchase with the First Home Loan Deposit Scheme and in what suburb?
We purchased a three bed, one bath Queenslander cottage in West End, Townsville on 1012m2.
How did you find the process? Can you explain to us your process experience?
The process of applying for the First Home Loan Deposit Scheme was very easy. Between our Mortgage Broker and the staff at Queensland Country Bank they made it very simple. We started by sitting down with our Broker, Denise, way back at the beginning of the COVID pandemic, who sent us away with a savings target in mind and what felt like endless weekends of house inspections. After four months of searching, we found the home we loved and Denise went to work, coming back to let us know that together with our deposit saved and a spot in the First Home Loan Deposit Scheme we would be able to go ahead and make an offer.
Did you have any hesitations about First Home Loan Deposit Scheme and were these overcome?
The only reservation we have had is that until we own 20% equity we aren’t able to do any restructuring of the loan. Although, at the end of the day this is the house that we can see ourselves in for decades, so the pros well outweighed the cons.
What advice would you give to other people looking to take advantage of First Home Loan Deposit Scheme?
When it may be the difference between missing out on your dream home and moving in to it, go for it!
What are you looking forward to / enjoying the most, living in your own home?
We love having a home to call ours, make improvements, and having the freedom to do whatever we want to the house (like not having to worry about screwing into the walls or hanging pictures). We are looking forward to making many happy memories, like with our new puppy, Bonnie, or having our engagement party in the back yard.
If after reading this you still have some questions on the New Home Guarantee or maybe want to get the ball rolling on your first home loan application, give our friendly team a call on 1800 075 078 or register your interest.